Created: July 23, 2013 at 3:40 PM | Updated: June 19, 2022 | By Community Resource Kit
The incorporated society is the second most popular organisational structure for New Zealand not-for-profit organisations, accounting for almost a quarter of all groups. An incorporated society is set up under the new Incorporated Societies Act 2022. Once incorporated, it means a society can legally run its affairs as though it were an individual person.
IMPORTANT CHANGES - what do all New Zealand Incorporated societies need to do now as a result of the recent upgrade of the Incorporated Societies Act?
The Companies Office have an information hub with resources that will be updated over the transition period.
The New Zealand Companies Office, which is part of the Ministry of Business, Innovation and Employment, Hīkina Whakatutuki, is responsible for administering the register of incorporated societies and the register of charitable trusts.
An incorporated society:
The rules (or constitution) of an organisation is its most important document, as it sets out the vision or purpose for which the organisation is being set up. It is the place to embed your kaupapa, or your guiding principles and values.
Section 26 of the Incorporated Societies Act 2022 sets out the minimum requirements that must be included in an incorporated society's rules. These are:
Tip: As long as these minimum requirements are included, the group is free to include additional rules if it wishes. (More detail is given on each of these minimum requirements next).
There are some restrictions on the name that you can use. The society's name must end with the word Incorporated and it can't be the same as (or deceptively similar to) that of any other society, company or organisation (see section 11 of the Act).
Tip: If you want to register with Charities Services, you need to have a name that Charities Services believes is not offensive or likely to mislead the public.
The objects of a society are its purpose. The objects can be specific or quite general but they must be lawful and should include the society's main activities, activities it would like to do in the future, and a general statement allowing it to do anything else to further its aims. It's important that they reflect your mission but are flexible enough to adapt to changes in the future. Note that any changes to your objects need to be approved by two-thirds majority of the members at a general meeting, and any change in the future may affect your charitable status (if this applies).
The rules must set out:
Section 79 of the new Act requires societies to keep a register of their members which contains the following details for each member:
The society’s register must be updated in a timely manner and the rules must include the societies arrangements for keeping its register up to date.
In addition to the mandatory rules about general meetings, you may also have rules relating to annual general meetings (AGMs or hui-a-tau) and special general meetings (SGMs) that also involve all the members.
These provide a way for the membership as a whole to keep in touch. There is no set number of meetings that must be held but the rules may state a minimum. In a small society, general meetings are likely to be held regularly e.g. every month. In a larger society, where a committee does most of the work, these meetings may be held less often.
These are held once a year. You may want to state in your rules that it must be held within 14 or 16 months of the previous AGM. The AGM will elect the office holders and any committee, consider the financial statements, review the year's activities and plan for the year ahead.
These may be called outside the normal general meeting times to discuss urgent business or to consider an important issue such as an amendment to the rules. The rules should set out how members can request a SGM (e.g. by giving written notice to the secretary) and whose job it is to organise it (e.g. the secretary).
Your rules should set out how notices of meetings are to be given to members. In the case of a SGM, the reason for calling the meeting should be included in the notice. Your rules must also state when the notice is to be received e.g. 14 days before the meeting.
A quorum is a minimum number of members required to attend before a meeting can begin or continue. If the quorum is not reached, the meeting cannot be held. The number of the quorum will depend on the size and circumstances of your group. It shouldn't be set too high or you may have difficulty holding a meeting. Nor should it be set too low, to avoid the risk of a small group hijacking the organisation.
Your rules must state who will run the meetings. Any additional details of how you want to organise your meetings can be added.
Decisions can be made either by consensus or by voting. The rules must set out the voting procedure. They should cover whether all, or only certain types of, members can vote. You will need to state how a vote is to be held, e.g. by voices, by show of hands, or in writing. You will also need to state how a decision is passed and how many members need to be present. You will have to decide if you want all votes to be exercised in person at the meeting, or whether you will allow postal votes or proxy voting (where someone can vote on behalf of another member). A proxy vote should be in writing and signed by the member who cannot attend.
NEW REQUIREMENT - the 2022 Act determines that a society must have a committee which comprises of 3 or more qualified officers.
The committee will be appointed or elected at the AGM and you can also establish sub-committees to attend to particular projects or tasks.
Tip: Your group should decide how wide the committee's powers will be e.g. whether it has the power to borrow money or the power to co-opt non-members to form subcommittees but it's important to allow the committee to function without the need to call constant meetings.
It is also possible to draw on the assistance of people outside the group. It is usual to have the officers include the chairperson, the secretary and the treasurer.
Tip: If you want to apply to register under the Charities Act 2005, officers (all trustees and all members of a board or governing body) will need to meet the qualification requirements of the Act. For more details, visit: https://www.charities.govt.nz/im-a-registered-charity/officer-information/officer-kit/
The chairperson convenes meetings of the society and ensures that the rules of the society are followed. The chairperson may also take on a leadership role in the activities and management of the group.
The key roles of the secretary are:
The role of the treasurer (either alone or in association with an in-house financial administrator or outside accountant) is:
Tip: For further details on the role of the chairperson, secretary and treasurer see Introduction to governance.
Other officers of the society could include: a patron or patrons, a fundraising co-ordinator, a publicity co-ordinator, and an education co-ordinator.
A common seal is usually a rubber stamp that includes the name of the society and the words common seal. Societies adopt a common seal on incorporation and the society's rules will set out when it will be used and how. Generally, it is used on legal documents and contracts that the society enters into.
Tip: Contact a commercial stationer for information about ordering a seal.
Your rules must state:
Financial statements must be prepared and presented to the AGM each year. These must include:
A copy of the financial statements must be sent to the Registrar of Incorporated Societies and an officer or solicitor of the society must certify that the statements have been approved by the members of the society at a general meeting. Financial statements only have to be audited if it is set out in the rules of the society.
Tip: It's best not to make auditing a requirement in your rules as you can still appoint an auditor if need be, e.g. when it's required by a funding body.
The powers can be as wide or narrow as the group requires, but if you plan to borrow money, how it can be borrowed must be included in the rules. The rules should also cover the powers:
Your rules must state what will happen to any assets after you've paid all your debts. You may want to distribute any surplus assets to another society or trust with similar aims to your own.
Tip: If the society is registered with Charities Services, any surplus assets will need to be distributed for charitable purposes.
Tip: To get some ideas, look at the sample set of rules or the rules of other incorporated societies available at Societies and Trusts Online - https://is-register.companiesoffice.govt.nz/help-centre/starting-an-incorporated-society/things-to-do-before-you-apply/.
The Constitution Builder is a great way of writing or revising your society's rules.